December 5, 2008

China will likely import more than 100,000 tonnes of wheat by the end of February as falling global commodity prices have made domestic wheat less competitive, an industry participant said Thursday (December 4).

Based on signed contracts, 30,000 tonnes of Australian wheat will be delivered to Chinese ports in November and 40,000-50,000 tonnes in January, said a Beijing-based analyst with an international grain trading company, quoting overseas traders.

Tumbling global wheat prices have made US wheat arriving at Chinese southern ports RMB200/tonne cheaper than domestic wheat of the same quality transported from north China, said the analyst who declined to be named, adding Australian wheat is cheaper than even US wheat.

"If the trend continues, my estimate is that China may import more than 100,000 tonnes of wheat from Australia by the end of February (2009)."

China bought 30,000 tonnes of US soft red winter wheat in the week ended November 20, according to the US Department of Agriculture's most recent export sales report.

This signalled China's first big wheat import so far this year, as the country only bought 373 tonnes in the first 10 months, down 99.5 percent on year.

A bumper grain harvest - which is expected to reach a record high of 525 million tonnes this year - and falling global commodity prices have greatly pressured China's grain prices.

The government has resorted to a series of measures, including hiking the minimum purchase prices of grains and increasing purchases for state reserves, to boost domestic grain prices and protect farmers' planting interests for next year.

China's State Administration of Grain will buy another 14 million tonnes of grain to boost its temporary state reserves, after the earlier purchase of 16.5 million tonnes, the official Xinhua News Agency reported late Wednesday.